Bringing Together Or Driving Apart the Union? Towards A Theory of Differentiated Integration

Abstract

This contribution develops a theory of the impact of differentiation on integration and unity among EU member states and discusses empirical evidence from four policy areas. According to the theory, the centripetal effects of closer co-operation among willing EU members on initially unwilling non-participants are strongly influenced by the character of the respective policy area in terms of public goods theory. The eventual participation of initially reluctant member states, which leads to the re-establishment of long-run unity despite short run differentiation, is most likely in policy areas involving excludable network effects, and most unlikely in areas dealing with common pool resource problems (the four remaining types of goods ranking in between these two extremes). The theoretical conclusions are supported by empirical evidence from four EU-related policies: the successful three show strong characteristics of excludable network goods (EMU, Schengen and the Dublin Convention), while the one which has proved extraordinarily difficult so far involves a common pool resource problem (tax harmonisation).